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Presented by North Guide, our year-end “What I Learned” series asked BetaKit newsmakers to share insights, ideas and lessons from the year in tech.
Few Canadian startups had a bigger year than Clio, the Burnaby, BC-based legal tech company founded by Jack Newton and Rian Gauvreau.
In July, the company announced its $1.24-billion CAD ($900-million USD) Series F, the largest software funding round in Canadian tech history. It was an accomplishment Newton, the CEO, describes as “16 years in the making,” placing the company in the record books and landing it alongside influential technology companies on global rankings, including Forbes Cloud 100 and Fortune’s Future 50.
“Relationships are everything.”
Jack Newton, Clio
In September, the company also announced its away jersey sponsorship with the NHL’s Vancouver Canucks. And this month, Clio opened a large new headquarters in Toronto, an expansion that makes Ontario home to the largest concentration of the company’s employees.
BetaKit spoke with Newton the day of Clio’s Toronto office opening. The following has been transcribed and edited for clarity, in Newton’s voice.
What I learned about fundraising
One key learning for me, from day one, is that relationships are everything. Much of the preparation for this year started in late 2023. We went through the very lengthy and time-intensive process of interviewing with investors, selecting who we wanted to work with. You don’t want to be fundraising with a “cold start problem” where you’re building a relationship from zero. You shouldn’t bring an investor onto your cap table without knowing who they are, or understanding their values.
I look at it like you’re getting married. It’s a very similar long-term, maybe even higher commitment relationship. Getting an investor off your cap table is harder than getting a divorce. And look, I’ve been happily married for over 20 years. I’ve also had a lot of very successful long-term relationships with the investors we’ve brought on board at Clio.
I really believe that the success of that relationship will inform the success or failure of your company. When you look at the bodies of failed startups, there’s often been a breakdown in relationship, between either founders and founders, or founders and investors. And so, I think founders would be well served to spend more time getting to know the investors they’re bringing on board, way before there’s a discussion of writing a cheque.
You need to reference them out with people they’ve invested in who aren’t necessarily on the list of references they provide. Do it the same way you would reference an executive hire. You have to do back-channel referencing, you have to talk to everybody.
My other learning and maybe my bit of advice, is this: even though you hear about how difficult the market is, if you have the right kind of profile, there’s a lot of dry powder that’s trying to get put to work. I know it’s an extremely shaky environment right now. The public markets are tumultuous. The interest rate rates are highly volatile. There’s a lot of uncertainty in the market. But for investors, there’s a flight to quality.
If you’re a high-quality company that’s growing quickly and growing efficiently—either break even or with a profitable EBITDA profile—the amount of investor demand out there is incredible. With our $1.24-billion dollar raise, we were oversubscribed by almost $750 million CAD. We brought on some of the highest calibre, highest integrity investors that I’ve ever come across, led by Tony Florence at NEA.
The amount of demand for high-quality companies is extremely high.
What I learned about brand building
Rian and I started the company in 2008 in a very scrappy atmosphere in the middle of the global financial crisis. Sixteen years later to be sitting in Rogers Arena and seeing Clio’s name up in the bright lights and on the Canucks players’ jerseys is certainly another moment I’ll reflect on this year.
I actually think our Canucks partnership may have been a more recognized achievement than our Series F. It was definitely something that was seen as way cooler in the legal tech world. My kids ping me and say “Dad, Clio’s logo is in NHL 25 on the Xbox.” Suddenly this thing that dad does all day long is cool.
“The impact of technology is often overestimated in the short term and underestimated in the long term.”
There’s a lot of pride that went along with that, and also a lot of opportunity. We unveiled our Canucks jersey sponsorship to our staff at a town hall meeting in Vancouver. We had managed to keep the announcement completely under wraps, there were only about five people in the company that knew. We unveiled the jersey with some senior leaders from the Canucks, the mascot, and one of the players.
The energy in the room was just electric, you could feel the pride welling up.
There’s a physicality to seeing your company’s logo on the bench boards, of walking through the airport and seeing Sportscentre and a video of a Canucks player wearing the Clio jersey on TV. Customers have noticed. Prospects have noticed. I was in Australia recently and a prospective client told me he was raised as a Canucks fan by his father. He said he knew Clio must be a real company when he saw our name on the jerseys.
I think a lot about how to build a company that’s not just a collection of bits on the Internet.
How do you connect locally with your community? How do you drive impact? That’s a huge part of what we focus on at Clio, and it’s about much more than a hockey sponsorship.
We have our “Clio Gives” program, where we give one percent of employee time, one percent of profits, and one percent of our software to nonprofit causes. I want our employees to see the direct impact of those kinds of investments. We give away tens of millions of dollars worth of software every year to legal clinics like the Rise Women’s Legal Centre, which helps victims of domestic abuse in Vancouver. We’ve supported the California Innocence Project for five years. They use Clio software to save people’s lives by getting them off death row for false convictions.
We’ll be making a major investment in a Canadian post-secondary institution next year. I think that once you become a later-stage company, once you’re no longer focused on just making payroll, you should certainly be thinking about investing in your local communities. I think companies have a deep responsibility to make an impact. It’s an example of putting our money where our mouth is, and saying that we want to be part of the community, we want to support innovation locally.
And my hope is that even though we’re not a consumer brand, that some kid sitting at a Canucks game sees the logo and wonders, “What’s Clio?” and goes and does some research. Maybe that’s a future employee.
What I learned about people
Something I believe just at a really profound level is that human connection is foundational to doing great things as a high-performing team. We have this incredible space in Toronto now that’s thriving and buzzing with people and we’re deliberately investing in our physical presence and our physical spaces because we see the importance of in-person connection to enabling the best work.
We talk about “on sites” being the new “off sites,” and we bring people into the office, whether it’s in Toronto or Burnaby, to get together and collaborate.
Obviously in 2020, we moved away from in-office time like everyone else, by necessity. And today, we have a highly distributed, global team. There’s a lot of remote work happening, and we have our hub cities in Toronto, Calgary, and Vancouver, and internationally in Dublin and Sydney.
Unlike some tech companies, we never said that zero in-person was our new world of working. We viewed it as a temporary modality, but we do view the world of work as substantially changed. We wanted to find the right balance of in-person connectedness and remote work, and I do believe people are highly productive and highly effective when they’re working remotely.
The cadence we’ve established at Clio is a number of days per week where employees come into the office, and whatever modality they prefer for the remainder of the week. We also have Anchor Days, where people come in to collaborate on a major project or retrospective.
We measure our engagement scores on a quarterly basis, and there has been a measurable performance improvement in the teams that are regularly in the office. That’s really exciting data to look at and you just feel it viscerally too.
Toronto is also a big part of that energy and our growth plan, strategically. I was born here, and it’s an incredible city in terms of the breadth and depth of talent. I talked about this at the BetaKit Town Hall, but if you’re going to build a global company in Canada, I really think you need to be doing that in a couple of our major cities to draw on a broad enough and diverse enough group of talent.
As Clio thinks about our next chapter of growth, scaling from $250 million of ARR to $1 billion ARR, Toronto gives us the opportunity to recruit from, learn from, and collaborate with the offices of a top handful of global companies.
What I’ve learned about Canada
I do feel like we’re a country that’s a bit adrift right now. I think we’re seeing so much uncertainty in the North American political landscape.
I think people are anxiously awaiting what’s next and seeking clarity on the next big mission for the country. I think there’s a sense of being adrift. We hear concerning metrics like our productivity falling short, our economy lagging behind the US, and our dollar weakening over the course of this year.
And in the macro climate, I think a lot of Canadian businesses are finding it very, very challenging in a moment where we should be building a really significant competitive edge in the worldwide marketplace, especially with AI.
We have everything it takes to win, and there are certainly some bright spots. But I think people want us to be doing more, is how I would characterize it.
I also think we’re potentially seeing warning signs with AI valuations right now. If you look back at 2021, the multiples and the valuations were just simply overheated and unsustainable. When you start talking about 200x ARR multiples, that’s pretty frothy territory.
At some point, things get too frothy and too overheated. There will be a correction, and no doubt there will be a reckoning for AI and AI companies at some point. But I don’t think that takes away from the long-term impact and promise these companies ultimately have.
Companies like Amazon went on to be even more transformative than people thought they might be in, in the heyday of the dot com boom. I think we’ll see the same thing with AI.
The impact of technology is often overestimated in the short term and underestimated in the long term.
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